B - Earnings call transcript Q2 2019

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Operator

Good morning. My name is Sharon and I will be your conference operator today. At this time, I would like to welcome everyone to the Barnes Group Inc.

Second Quarter 2019 Earnings Conference Call and Webcast. [Operator Instructions] Thank you.

Investor may of your Director Pitts, Relations, begin you conference. Bill

Bill Pitts

me and Sharon. quarter for With Senior President Vice Good Chief Dempsey; you, Finance Officer, Officer, thank Chief XXXX Barnes Executive and morning call. President second Thank and our Chris everyone, you Stephens. Patrick Group's for joining earnings and of are Financial us

corporate the If you can release, our earnings Investor section you Relations press have bginc.com. not received a website of our it copy on at of find

will to referring we release earnings posted which our slides, call, supplement our During be on the also are website.

financial Our which measures discussion today GAAP measures includes certain helpful related investors. the additional non-GAAP is we These to in to our measures believe accordance regulations. information SEC reconciled been have provide with

reconciliation of table as and the a and in Exchange website our our X-K release find submitted the part Form on Commission. will to Securities press You

and be remarks to in Act the These Be uncertainties the question-and-answer advised both call, statements of that during may statements may certain that today's and statements and subject Litigation are Reform during on forward-looking that from Private Securities make forward-looking as opening risks mentioned XXXX. we actual and session, website the bginc.com. through available to defined section risks our Please in relations periodic of uncertainties with in described cause corporate consider at These results today's the projected. those filings are our materially differ call filings are SEC. are the the investor

we our the Chris updated quarter over for our the will provide results turn now Patrick that, of Patrick? his call outlook. remarks. me to second After open-up XXXX questions. will Let for opening a review call Then and

Patrick Dempsey

and Bill, good Thank morning, everyone. you,

the a several continuation we quarter, on present that the our unfavorable impact had favorable both During performance. which were quarter, the of market first trends and second saw in

and customers postpone lingering Industrial, remained Accordingly, strong uncertainties new the global our causing near-term term again medium has of Industrial remains near performance to is many trade markets soft lower. improved. for our with slightly At expectation expectation for to business our Aerospace, At end projects. now

X% Adjusted quarter sales down second share margin a declined Group, Adjusted X%. was organic $X.XX with X%, revenues down points. down Barnes $X.XX, basis from income per For earnings XXX declined year-ago. were while adjusted XX.X%, operating operating

mind second quarter have discrete However, tax last related EPS that to in benefit keep $X.XX year adjustments. an favorable

squarely productivity we we a As industrial of execute integration result, differentiated Enterprise the Supplementing transforming been as business lift deep enterprise-wide and Barnes property. our has increasing improvement intellectual strategy, portfolio and on remain by of our focused portfolio the to margins drive technologies higher. evolution an System the level

overall our markets have of been committed While energized margin That not said, immune existing from influence geopolitical end and the regardless deliver performance cycle. current to earnings is of favorable, are we in and challenges. the trends our team the in fully climate, softening

team on At cost has line are launch market will of Our with across of ensure peaking to alignment to equally is taken strategies, placed and headwinds innovative services. management leadership take share steps same to a time, emphasis on range continue different activities increase market proactive these and opportunistically and All intense to current to top improvement. products new all being businesses offset go-to-market focused our driving demand. the current

over greatest businesses varied remains our world-class steadfast. on will value stakeholders commitment margin oriented long-term growth our focused the Our high us strategy for allow long-term. to growth Building a the company, produce

the investments pursuit to generator organic been secure and cash Combined a future. ongoing acquisitive with of we of relentless strong driving are our flows, strategic consistent

improved. as are As are such, the on confident we we're we believe positioned the right path for the that that and long-term markets well

multitude programs. industrial second customers of the We've with sales declined today's given trade new down environment and uncertainty X% our were defer of a sales move quarter the Industrial, to drive XX%. were launch regulations, discussion seen now environmental and Certainly, evolving performance, beginning Let's to is factors. global organic total challenging, on

auto This and PMI in are in or in extent generally said, slightly sales resistance the orders is in business is to current decreasing declining global especially levels. reflected the China production trends our true industrial with industry the a Europe, quarter. America. is by providing where manufacturing simultaneously lesser general to North Such organic That pressures organic impacted up some conditions

our At order second $X XX% the second for a year-over-year automotive outs activity -- year's hot are was from the second reflected that by organic about half. XX%, declining quarter over Molding last declined million particularly quarter mold expected ship sales Demand Solutions, push with sales for runners same basis. in revenues now and to impacting soft on

sequential see up with mid-single did high respectively. single digits sales and and quarter-over-quarter improvement we However, orders digits,

for been this expectation part molding solutions Our lowered. of has

North Although do QX up to QX we America. pick to start second sequential in which we program launches expect improvement in are starting in continued and as half, see the

markets, Our the in packaging and fourth softened quarters. medical and somewhat. are solid and backlog sequential significant third demand have forecast while molds growth care seeing for is global our Mold healthy business levels personal support

For Molding be growth a as we to to record XXXX. overall, mid-single Solutions, digits compared organic now down anticipate full-year

low general especially At Force and while die see proven and to Motion to are in were markets be continues more organic particularly America. high industrial softness, Control, Europe double global Asia, down digits digits. single The in North and were organic market resilient, & orders down sales tool

die sequential the see through and has improvement tool and we as We indications anticipate that progress bottomed half. positive some second market the

For continue to XXXX. to forecast to flat organic XXXX, we be growth approximately

low production single markets. by and At driven in end Engineered Components, organic orders high auto digits sales lingering weakness digits, declined declined single

level, reduction. production high North down and be production X% at China, a with a global Europe now to relatively approximately auto all we expect America, seeing While remains XXXX

for organic million XXXX. $XX outlook and to Consistent than be first digits. with anticipated we've our automation, Components prior seen now At is view, of low half our XXXX for down growth sales single Engineered lower expect revenues approximately

year-to-date, high-margin opportunity over as growth great Group for markets Barnes long-term. this and for the we slowed automation business to the While robots a has see demand continue

global We've the of and deferred. seen progressing. leveraging translate market customer in Our transition as activity uncertainties been levels orders from into China with are initiatives growth are to is quote Molding through programs customer our high Solutions contracted especially ongoing relationships more currently business, quoting

the has full-year outlook We been anticipate for revenue our Industrial now trimmed. single-digit segment Overall, low a decline. organic

operating be adjusted from margin down approximately view. expected Forecasted to to likewise is XX%, our XX% prior

of statement XX% OEM industry growth last record to profit. And have XX% with revenues strong call, of excellent and up growth sales of and same operating the execution Moving opening with as another fundamentals provided quarter were and Aerospace. quarter's Total X%. aftermarket

again grounding points from XX.X%, up at was the of basis the year-ago. XXX MAX. first topics In discussed the one XXX in segment most very has margin once Boeing the of the strong been industry a Operating half,

near-term. to OEM situation impact the the business meaningful continue in any on don't We but envision closely, the monitor having our is return delayed flight to

aftermarket and remain In fact, backlog in OEM for team business like Currently In is our program demand the XXXX improved. primarily parts, working XXXX on our is production. And spare been our the aftermarket, XXXX, CFMXX, our and filling through OEM a towards business especially has solidly again healthy positioned outlook good XXXX level. and MRO healthy. the -- execution programs reflecting services

OEM digits. high growth quarter high In parts with first the to single high both in Aerospace revenue our to and XX% the increased operating is to the of MRO XX%. up growth in full-year, digits be growth sales be approximately with than spare margin single digits we've margins high forecasted outlook single For continues our outlook. mid anticipated and sales aftermarket, better digits, now and to up single incrementally

second the the both and performance. weighed operating key Lower XXXX quarter summary, of sales volume performance. at Industrial sales a clean being Industrial on quarter with in So driver was the have for Aerospace

team the actions line and impact necessary bottom drive productivity. the the taken However, has to mitigate overall to where and possible top

will conditions take to volumes continue Aerospace, solid deliver will of warranted. have actions continue outstanding for margin solid further we and At our to and performance fundamentals monitor that increased and We to see as portion market helped and portfolio. execution sales closely

to position and will portfolio Importantly, markets organic long-term enhancing sought end as acquisitions the for growth out recover. better investments growth industrial in be value

positioned emphasis near-term we to on forward that conditions Our are well improve. power is ensuring as

discussion the to a turn financial me the details. call over let Chris for Now on

Chris Stephens

and morning, everyone. good Thank you, Patrick,

begin our me on XXXX. results of move then quarter to And highlights supplement. Slide second outlook a our for X Let with our updated of on discussion

quarter, FX businesses sales. positive second and X% were million, of The period. year X% acquisition sales $XXX had a down million, X% a the and over IGS prior of For impact was Gimatic the XX%. contributed sales $XX income Operating declined down X%. negative Organic

a from a a million $X.X in by due Interest Gimatic lower the operating and Excluding accounting XXX average XX.X%, million, result declined down adjusted income operating of interest was acquisition, debt points. margin adjusted to as million was adjustments, an to expense offset X% partially $X.X Gimatic outstanding of average up purchase million basis rate. $X.X $XX.X increase short-term year-ago

With tax with granted tax end allowances the XXXX. contributed the items of to of valuation and to in quarter offsetting tax benefit company's second rate. year taxes, was prior $X.XX holiday XXXX XX.X% -- benefit share of U.S a adjustments the tax reversal than for benefit a respect the for reform Partially of lower certain current per usual share the compared the the tax XX.X% per second was in period of to period. $X.XX these lower rate tax foreign year last late quarter In effective the international an from

Net million to $X.XX income or per per was diluted diluted year-ago. $XX.X share $XX.X share million or compared $X.XX a

per share Excluding quarter shares. count, $X.XX purchase shares outstanding respect Gimatic the With diluted in $X.XX, our adjusted was adjustments accounting million of XX.X was XX%. net down income second to quarter, average short-term share

second authorization, repurchase. of shares available million approximately Under cost the stock quarter, $XX shares a XXX,XXX leaving repurchase repurchased for in X.X at we the XXXX million

less million cash activities year-ago, approximately half million, by $XX the expenditures $XX $XX million working to $XXX driven Free was million cash by first million compared improvements. flow, million year. over of we operating Year-to-date operating as cash versus was up $X Year-to-date define $XX capital capital last CapEx year. was primarily flow last provided a which

was balance would to end ratio EBITDA sheet, from our covenants, allowed. existing of respect be With borrowings to additional approximately debt quarter. million senior the slightly first debt the of our up debt $XXX X.Xx, Under of our

performance, to Moving with segment beginning Industrial. our now

in our large Gimatic were second softness X%, X% the to year. For from quarter, while end acquisition part by ongoing XX% last decreased contributed FX in revenues. sales decreased due million, markets. IGS automotive Organic $XXX of Unfavorable down sales sales and X%

XX% of primarily was down clean having the profit volume accounting a Overall, sales impact. and greatest volumes quarter purchase the adjustments. million, sales profit impact with Operating lower driven $XX.X by organic short-term lower

the margin XX% and basis purchase down down $XX.X was adjusted short-term Gimatic operating quarter, accounting current XXX in adjusted million XX.X%, Excluding adjustments of profit operating was points.

basis XXX from the first further up on a we as improvements XX.X% XXXX. was points sequential adjusted through However, we basis, of anticipate the operating margin progress quarter and in half second

to Moving Aerospace.

up results our quarter quarterly were $XXX parts growth were increased sales once aftermarket Second in of and Record again XX%. XX% sales OEM increased sales both X% excellent. spare from solid and MRO businesses. million

sales $XX.X XX.X% Aerospace a team was up again contribution high-quality from XX% of quarter XXX million, up sales driving year-ago. points a the profit to leverage performance. margin due basis profit to the Once margin was Operating Operating of higher XX.X% increased volumes. with

to total Aerospace down million, down compared quarter. at X% the a last sequentially ended from $XXX year-ago backlog and quarter X%

backlog million OEM Aerospace expect over decreased to And consistent our from $XXX next million $XXX months. ship XX to For with we ago. quarter view, the approximately specifically, of XX% QX backlog our a

previous Turning revenue forecast flat updated approximately is growth revenues the FX sales approximately negatively expect of year, to of and revenues impact acquisitions with which X by lower outlook our to These Slide We organic factors X% X%. to XXXX view. total are growth approximately X% X% to to contribute for our now supplement. our X% unchanged. We than of on

range continue our being XX%, XX% margin split to first XX.X% guidance, is the full-year half. be to $X.XX Adjusted in half, we EPS with Consistent to $X.XX. EPS to adjusted operating now of adjusted see range be second expected of in the XX% prior forecasted our

fourth the XX% approximately see quarter and QX given also increased being Molding the Solutions, deliveries we EPS split mold from Additionally, in the XX%. expected QX,

to A be to be other items. is million. XX.X% few approximately The Interest effective and $XX outlook XX%. tax is forecasted expense between anticipated rate

XX $XX CapEx million now shares to between forecasted is be cash and expectation is and diluted Our XXX%. shares approximately approximately XX be Average to forecasted conversion are million million.

a includes While pension than cash the is conversion discretionary prior now in the be will lower our cash our metric reflected operating it flow contribution, million $XX in view, which third-quarter.

on experienced will end, like is driving at cash We're the acquisitive weakness organic quarter, look to generation So protecting possible both some Industrial by strong productivity. offset remains focused time, future being our markets. the last and profitable same for strength we to and At margins of in growth. extent helping Aerospace investments our to the

now call will open to questions. we the Sharon,

Operator

from Instructions] Myles UBS. [Operator Your first question with comes Walton

Louis Raffetto

Good Myles. morning, guys. Raffetto on Lou It's for

Patrick Dempsey

morning, good Lou. Hey,

Louis Raffetto

Hey, on the contribution a of Chris, things. quarter. thanks for bit the little pension explains color next That

Chris Stephens

Right.

Louis Raffetto

Just of sounds planning it I want additional you like to XQ, shipment see you’re -- and guess. second if half on guys the the based in on recovery molds still

-- mean, so I you is some pickup? good that And clarity really do expectation end of still have or of there sort on market

Patrick Dempsey

and and half manufacturing outlook. Lou, over for in the the is is the months, In we as a this of we out the -- solid many second next one the QX of that have Relative QX. mold booked in both already Patrick. to look cycle backlog the aspects that instances most already six business

have molds business. happen. to within make and again, is significant on we clearly in So ramp team focused our sequential QX those But very a QX executing shipments

that’s second coordination is well. aspect to and validation been that The with key choreographed customers as happening closely that has our for

Louis Raffetto

of the potential further I great. or then sort could I ask about opportunities within guys Okay, market seeing just very area? you guess, M&A consolidation much. you the Thank Gimatic still pipeline. And if Gimatic end

Patrick Dempsey

number in in our Yes, other Motion spaces of Force we space Solutions well for a businesses, active that as be and Control. continue to as & Molding other

been said, that and So we’re forward strategic to as from we’re looking team also has to not prospects organic at go that only With of but in disciplined flows both generating continue the invest active the remaining acquisitive to looking our valuations. actively opportunities. cash strong we criteria, both terms we’re and

Louis Raffetto

Thank Great. you, guys. All right.

Patrick Dempsey

Lou. Thanks, Great.

Chris Stephens

Thanks, Lou.

Operator

Christopher Next question with Oppenheimer. Glynn from comes

Christopher Glynn

Thank morning. Good you.

Patrick Dempsey

Good morning, Chris.

Christopher Glynn

by So rate. the looking industrial the run flat guide, rate the above million average sort half about second of half revs $XX at industrial run implies first for it

have molds that Just for for assumed curious cycle if is you magnitude short up step volumes? that all and what

Patrick Dempsey

Chris. being believe make optimism the the of some July, incremental year weeks, first in to have that runner particularly building businesses. up, question, progresses, we've up QX improvement three And there And that to within cycle hot of over the of the Good short sequential business. see first being seen step within also sequential Yes. three as business fact The QX we week majority is, trend for in QX. only our that continued do albeit molds on three automotive will seen but the orders we improvement reassuring for what is we is terms do weeks, built weeks that A the is from week we've the we've seen from QX.

Christopher Glynn

the Okay. the runners cycle The backlog, long that's but part of -- hot right?

Patrick Dempsey

cycle very I No, referenced and what the short hot was No. hot is automotive that runner runners much a business. the

Christopher Glynn

was lower Okay. And Industrial margin, actually then up just on in quarter on the sequentially percentage the revs. second points couple

in half your revenue levels? execution just So time reaction accounting just if the reflects that to accruals, wonder was if or there's timing -- first

Patrick Dempsey

view with productivity. to I full driving with would give view credit team driving leadership Enterprise the think, to a overall System, a Barnes the to I

team so what the tremendous Chris, that it in think operating sequential in to was albeit improvement challenging your the a credit of was a pleased was was XXX And leadership basis that from line top to of -- points I point, QX with And margins. terms QX I to quarter Industrial.

Christopher Q Glynn -

of OEMs if China, your Synventive good. U.S Synventive's trade China. there's And position China domestics Yes, be strife. be mix, in backlash that Is got caught one suppliers? answer? from that all was to the any at coming versus and Does learnings in any in and Last on would gleaned up in global terms -- by

Patrick Dempsey

Well is last our die Regulations. the thirdly, a auto. recognizing the X terms us hot two I seen within tool they in few just market, slowing the China areas, medical. we've and Omissions in significantly think down serve the the market clearly we've that we impact call business the and in What serve China runners, Chinese acceleration then, of the of in and implementation seen for months We auto, what our the primarily auto

regulation implemented be created immediately. the this industry, in close it a sort a inventory that with And created that's supposed of a was the proactive year have cities taken you of glut and is the it's almost And what sort so to lot and from now a of to itself if implemented logjam, of backlog of like. -- auto step a

shoots overall, been the signs market so, clearly the within And China, has see there of continue we continued green pressure. on to but

Christopher Glynn

So on position or no impact treatment of companies your from U.S backlash?

Patrick Dempsey

seen anything effect. we’ve that not No, to

Christopher Glynn

you. Thank Okay.

Patrick Dempsey

Chris. Thanks,

Operator

question comes Your Davidson. Summerville D. with from A. next Matt

Matt Summerville

Thanks.

business, hot Synventive the much for 'XX far little of a how business year? in on full-year, year-over-year the shakes sticking sense the the runner were versus that you better as was as guide out QX? us of side down what in can bit for Just sort give And the

Patrick Dempsey

Our auto in -- light went automotive our within pretty overall much Matt, hot line runners, with business. vehicle,

we so and touched were our business aspect depending on And of to XXs what automotive. the which teens high saw

Matt Summerville

to business business addition then, this to for it hot key it's hit hot guide of that and see to runners I’m that's is bridges, like and the sort fact revenue of QX. the full-year what the in in second And give how half? guidance because you Patrick, more in first shipped higher sort for sequentially runners you half, current that sounds understand in granularity can year your your auto expectation trying little pretty getting just a me auto in to molds order for bit in

Patrick Dempsey

you’ve we've XX seen also for is built of factor QX. QX guidance and the we overall runner QX is revenues sequential our our have business, XX, between hot terms business QX. split in that a And in what that and Matt. clearly correct, a in improvement You’re a to again It

and step up QX backed is this I’m confident already improvements So of some not QX the and with to aggressive and that year-to-date. between -- by in up to what -- overly is QX QX from respect reasonable seen we've its

Matt Summerville

you before, And quarter, in if the you look the second incoming rates that guys was able If I business at what in believe Industrial? QX, book-to-bill to Industrial the disclosed order in then your number you’ve that. are for provide

Chris Stephens

was in low Industrial were organic incoming for QX book-to-bill in for orders down Industrial The and double-digits. QX X,

Matt Summerville

Great. Thank you.

Chris Stephens

you. Thank

Patrick Dempsey

Thanks, Matt.

Operator

Your Alembic Skibitski with from Pete comes next question Global.

Pete Skibitski

morning, Good guys.

Chris Stephens

Good morning, Pete.

Patrick Dempsey

good morning, Hey, Pete.

Pete Skibitski

-- in worst-case model of they similar a timeframe no are hearing in Patrick, … changeovers kind point you their a what tariffs production even there of what may would matter if from stay China if indefinitely. that, are on, be think stay terms customers your some is just At the up the on OEMs are, to which rates I

Patrick Dempsey

Yes.

Pete Skibitski

should demand which runner hot you. drive … for

I So I’m say, changeovers better? dynamic tough is we’re wondering, we expect some changeovers comp talking or just want hey, just particularly the to this if to stay even of at the on. model kind whole that point, OEMs tariffs just on understand should year through model

Patrick Dempsey

are point, seeing that what we’re tariff change even them. the to with has issue trade Well that and Pete, hangover hanging over been disputes right released the model now

America would are we’ve of have is North of the by consideration domestic that And domestic releases also that protracted. which that going releases we in full-year to the end, disputes disputes the have to are not so our sales. be for outlined and China come think resolution OEs, and impacted European. of have that in from the now seen the a the production, terms trade clearly because you releases we domestic particularly internally tariff Chinese, And releases more their you guidance in in the Western from China then What

a not to the we to seeing changes. model customers. And as at addition nonetheless what and seeing much which sensing beginning QX trade has -- a in the now but albeit in release so our of of the resolution are lower relying terms What QX, feeling that we’ve we're been on as slow support we're from release guidance level,

Pete Skibitski

it. Got

auto not X China understand guy, there? can you help just auto me what over you Can Okay. an is -- impacting negatively being

Patrick Dempsey

it mandated those China new produced. they -- emissions And new Europe. the they that X the year they dealers the cars has the of to happened being in course, what do have those they given that and another are trying what that is that large is controls basically the And car and provinces What’s that sitting pull Because their were requirements. have now years, OEs them What immediately. of move, they what at still is a but standards on were requirements inventory dealerships half certain is to standards. or it notice is and taken meet thought it and implemented that issue in and want to a year, upon those cities doesn’t to that a really that’s to is forward the many equivalent of were China half. that themselves had was the implement happened year thought meet inside buy for existing logjam consumer complete of looking they’ve you almost a it meet a new -- been But had with

Pete Skibitski

Okay.

inventory non-compliant we’ve right got now? there So

Patrick Dempsey

Effectively, And on can is they're the make happen. but to sell they discounting that dealers. off doing still heavily what it

Pete Skibitski

Okay.

to of thought Let the the years. news, on in me into seemed of outlook even GE pretty some and a I the middle -- switch thought number quite bullish I Paris for good programs, kind Are the decade you extended of that time feel hearing thing in visibility on CFMXX the big next like visits? shop same shop RSP visits. to them? terms for of from Does maybe it's

Patrick Dempsey

we was you XXXX What talk as there in and we are the CFMI to hearing what use reference are now is the CFI we that even the XXXX. now two know JV, XXXX, OEs,

of terms only the expansion there CRPs. the the business of in a business via is our also spare MRO where that not all there's peak but RSPs, I parts for and Barnes terms very So think bodes well our slight in via

Pete Skibitski

That's great. Great news.

guys. Thanks, Okay.

Patrick Dempsey

you. Thank

Operator

Ciarmoli from comes Michael question with SunTrust. Next

Michael Ciarmoli

give that sequentially. organic digits. color correctly, Is to -- a did guys. And those Hey, did worsen I hear Thanks the you organic any orders questions. for taking you industrial can down incoming Hey, that low good year-over-year? us morning, double Patrick, orders

on maybe? that, Just color a little

Patrick Dempsey

that saw in 'XX XX% So been yes, XXXX They our I seen QX and you softness were business. correct digits. you we mentioned XXXX, heard QX in you for we And what double to organic highlighted orders that saw, and for low if go and the -- I've Molding what our year-over-year that cited. terms or that the QX -- within the were back strong a to has automotive in hot Solutions business we’ve runner QX of as very I've where side reasons down

and QX slight QX, between but sequentially was downtick there a So not insignificant.

Michael Ciarmoli

Okay. And then just what are margin the outlook the industrial -- what's operating now XXXX? for

Patrick Dempsey

So yes, to XX%. approximately XX% for XXXX it's --

Michael Ciarmoli

of And just we Okay. think ongoing could right are they about should kind quantify if about any how be then cost those or a that going we to of Should you you costs, going associated we size, some with be be maybe headwind to about talked should there's of to initiatives expect to if some meaningful? think these initiatives?

Patrick Dempsey

looking to whether basis, So think conditions, an on ongoing to are is current further and to would even Barnes teams at relative outlook what those overall is leverage System suggest market Enterprise I productivity. their there drive also evaluating the for that I the conditions opportunities

time I of those guidance. have that productivity have process same the the the this through factored factored any benefit juncture dialogues our of in normal and those significant ongoing to very say productivity, costs so in And place taken weekly. in. At terms of much they’re been System at is Enterprise none would

Michael Ciarmoli

last just maybe then And it. got one. it, Got

there. had out the targets guys XXXX You

earlier about to softening, I obviously how global should should weakness I of I little and you in progression XX% had we lowered how targets the think spot know them got mean, a sales X%. margin, a now? XX% think bit The industrial year. operating a but of X% in organic the to CAGR we've bit to you think XXXX. here kind we little of those about

Patrick Dempsey

in where and that the -- Mike, and looking add that again the of it Yes, fortunately, A seeing at the half, given call the we little is are what uncertainty of trade would we are trade first on near-term, how on to second based are we -- just out. focused what on terms I kind premature uncertainties. half

XXXX, second we ramp pretty guiding of for half. good second that purpose half ramp the a up purpose in most backlog. because of of Feeling For sitting clearly are is up confident

So accepting we molds the us do premature. kind What into the it's a Molding an provide that accordingly. of our execute quarter say as in period. it's on side fourth a those I XQ would we will we executing Solutions But matter of is will customers time update little

Michael Ciarmoli

Okay, perfect. guys. Thanks

Patrick Dempsey

Thank you.

Chris Stephens

Thank you.

Bill Pitts

Thanks, Mike.

Operator

Next Sidoti question Company. comes Marshall from Edward with &

Edward Marshall

guys. morning. Hey, Good

Patrick Dempsey

morning, Ed. Good

Chris Stephens

morning, Ed. Good

Edward Marshall

So talk half range you I the Industrial that XXX to like ask, it at midpoint I basis the wanted guidance to the to margin, of about for mean above pace, that's looks in get coming first can that the maybe that's for is looking just need business that a to the margin -- and molds math. What you do you that just think driving improvement moment? points

Patrick Dempsey

But closely meet executes. our terms QX we that key earlier, piece both are also, large the mentioned to backlog molds QX in Yes. sits requirements. our and our in we are fact much and very of of team the of terms that see Industrial working What within a the business Primarily molds that. within molds in I is those as add scheduled customers'

part constitutes margin molds our is margin. fact runner hot most margin for higher comes also uptick So that the the high which it from the some also business, from our incremental but business improvement automotive

Edward Marshall

Got it.

you it cancellations sluggish what's push demand -- affecting mean kind like seeing and if outright don't aside or talk sounds a of like, hot business you what is mind? of it there you're So about molds. about I runner go looks more general, back out maybe maybe what's the talk can in the dynamic from and the

Patrick Dempsey

to outs, me things Push I what different I think out means let define Yes. Push people. think. different

may an product. change will they final there's simply potentially the ask again days, that the what For final is if at takes a order. a slight realizes us for the incremental that can as made And be be for modification such, that to five an modification. validation us a the customer push is enhancements slight of which out mold, But fact that

moves next then part we happy the the So ship quarter was are to at it, it scheduled it the of end into but if quarter. to do the from

the of our at timing mold quarter-to-quarter, major business if terms and in we've them ship of nature be in look dramatic them multiple these all a at swings leave of shipment both shipments molds, back and terms until the a issue moved our once will it's So the ready. the are movements once of once, in business. -- seen is into molds of over all that none XX the we it you just wants which programmatic what can a few you molds, molds mold business and but There's since of little could quarter-to-quarter, because bit in years at more orders last that to could -- customer is they business all the be

Chris Stephens

of of now as be profitability it into us, And, -- point through recognition so associated to roughly XX% of so a cash for upfront only carrying really month recognized would molds, June is we from second payment the is XX% of add at cash good we quarter, heard -- when with much not which program the and And we that's on that of a million you get roughly in in It's last comments cash -- we to the I cash year. And view on sale. is the half order just also Patrick's it's recognize side, the typically Edward, that XX%. , the terms that. around cash $X issue a a we then the in get revenue get the execution, a anticipated shipped those in

programs. dialogue We those are percent So pretty understanding of open status we team. degree confidence from complete often on where high just the the it

shipped we have didn't that EPS ramp guiding roughly of from quarter the well Aerospace, as to look that the but wouldn't at and mostly fourth going be So way confidence, business, an as we Aerospace view we two XX% it that’s -- in year-end. both are, how if Molds from third of is XX% on and we continued point it dependent as we the quarter see of being that by strength our pieces

Edward Marshall

said long higher a that God, you I guess I runners the And it. on some XXs your kind of covered but significantly XXs the at, mean but or getting business in the past XX%, past I have or look time, weaknesses if business are Got mean, at down, basis margin I margin in down a of XX% these high business, you Solutions high to I’m relative think held Industrial hot low I teens, for recessions high, there maybe has Molding what and guys industrial. I in

peak thoughts as trough I’m businesses So you that relative any improvement. in I would kind -- if lot in I know guess questions, margin you and from past you back, a, you’ve kind comment see business of would a seen could give to industrial of on come curious but the the the to be differential that's these cycles. great. of

Chris Stephens

question. It's a good

Patrick Dempsey

quarter what I where see of to highlight I Yes. maybe you years resilience the portfolio would Well, we of Ed, have is think been in that example X, would this an ago. compared the XX

dollar on in through is there's that seeing decrement what terms the incremental tremendous that so there's obviously and the on There's flow then on -- top downside. you are the line. leverage And upside leverage the of of clearly

all had over done on based the just Enterprise diligent necessary the in in global we've driving been these course through anticipated System, trade of has the businesses, what believe actions Barnes of we for that that we last So also and months auto which anticipate X the uncertainties. to were softness terms of very

the are X drive what indicative playbook is a of disciplines to XX -- they I contingency QX, they XXX XX, so are And and the think upside that of see I we going you’ve on what the one basis have seen basically, that to teams sales. planning, are a see if downside is lower we if why that minus a of referred we a actions initiatives in a I X plus up as sequentially are headwind through drive says whereby plus and what the minus points are that and

Edward Marshall

aerospace on I'm of haven't we of time been it's Yes, it's this a a your in good call, to curious, spent portfolio. lot bright spot see.

that but you As and might -- are if I that anything what program that some engine working be? of the of you with asked know can I'm of the question that I curious maybe on content this know the some have -- ultimately on. look offer the going I that forward, you can have an solution on been as add you that's your problems before, to sense that's do any we've GEXX. engine the

Patrick Dempsey

Yes.

to Base content but it's In for will produced GEXX, will another The definitely been in not to -- we're XXX the GEXX -- not program. part closer where the of go involved continues month that actively current Ed, We're be X.X the on range contributor out obviously, as working that's believe not get we're indicated not closely GEXX. approximately it a until -- working previously that a GEXX, it's well into entry in and issue are with meantime We great the and I our that solid an we be the we was in it's service, and the anything we've the it not same area the us. solution And on. a with the wouldn't into unfortunately, in. have as the at OE

Edward Marshall

And mean you speakers] it when content awarded [multiple when say Base the or where first GEXX, were today started you program? you

Patrick Dempsey

No, just I I no, content mean -- today. mean

XXX, the the XXX, think GEXX about peak Barnes the successful had aircraft. of you the If was in it at Base we approximately most -- per million on programs its with $X one

revenue that shared sharing through has And so the programs. with is happened engine was GEXX the what

where were So partners. the us which into were by engine, past pieces in bought to large the available of

of for some of the the off saw content GEXX. the the that GEXX took that potential Base so same And in we

Edward Marshall

stock is mean, I a fallen, you question on invest in that value leverage or that for the that's $XXX up repurchases? eked shares EBITDA. final stock with off you But a deployment. opportunistic piece the is the the maybe million $XX of know bit, find there's last XX as of quarter. the repurchased capital $XX in weakness some year, little is little the I I kind million mentioned on the to of me do in million stock it's million And guess, bit Chris, but the it. kind Got that also prompted earlier you you

Chris Stephens

way to the gets annual like Board of last basis It share an I year, plan. we the executed opportunistic dilutive typically we generally price. were on guess, look good to issued This based have being was much and for it. was level. at discussions are view our we relative what buyback I we those plan it on. at as looking as as on look don't now impact offset at that's quantity I of what it No to

We have -- as the CapEx. are squarely been as we in focused well M&A always the on of growth side internal as terms

slightly the as guidance to down full-year. look Although came we our CapEx

We are one growth organic number committed as still that -- priority. one number to

summarize, kind So now we out but opportunistic, the of foresee much of -- and right what just appropriate. XXXX. way don't in was share as would we've I it's acquired close feel Meaning we repurchases we

Edward Marshall

I it. your much. Thanks appreciate very comments, Got guys.

Patrick Dempsey

Sure. Thank you.

Chris Stephens

Thanks, Ed.

Operator

Next question with Chan Baird. Josh comes from

Josh Chan

Good morning, Patrick. Chris, and Bill.

Patrick Dempsey

Hey, Josh.

Chris Stephens

Good morning.

Josh Chan

your the in of Engineered question first both My businesses, somewhat business. Components look the is you businesses But year. if & morning. softness Industrial guidance Force there. and Good a mean, on change at the for control Motion didn't I

these well? but is assumed we know business, about ramp other I as the talked businesses a molding there in the ramp two So in

Patrick Dempsey

business we've tool Control up Force held in the offered Control Control, our anything markets. resistance that is, is general rest What some die, well. now seen Force Motion the you some industrial end industrial we've the comprised industrial. as & of general recall XX% general other industrial Not our And in pretty we've we've the the has seen Motion Motion downward of & SBU & is, Force & what as significant. created may to pressures It's that of and some within businesses in seen XX%

the planned pretty -- remaining basically through with this so year. that we we rest of the level on And

what On & the seen I that seen the bottom. we've is think would die we've it, tool side, we suggest

so And is QX of we incremental pretty that’s that -- improvement QX, to that, expectation have some terms there, steady. with nothing challenging slight but in

Josh Chan

the helps. you quarter, geographies there Okay. know softness but us performed business, where in in by I of is color Thanks. each may businesses Yes, give in you terms the within on And any that saw terms the be resilient Industrial end can more that of broke out you more and how growth geographically? markets.

Patrick Dempsey

Well, coming to from markets XX% we geographic, total terms to broad business, or about Asia But rather XX% XX% of in you if themselves, say go Industrial our industrial. from the Europe and predominantly. our about I the than that in general, you’ve based it China at are think as so would BI, Americas, end from and revenues Josh, look approximately

an have flavor approximate a so of And basis revenues you our on generated worldwide. gives where that been

followed we sort think & and markets vehicles medical, is primarily and personal the market largest molds end care we lump business tool and is driven die our light by the of industrial, you by together packaging about then As we're our general have serving, and which automation.

about markets saw we orders, vehicle, the terms America. general revenues, in if uptick in -- about you they’re end of in an markets. most think the dominant -- we in we Whilst So light think of terms we saw North saw Europe. When the end industrial, pressure we saw

in depends we where we're was the -- as whilst America saw say pressure, general, for end that serving, and most the but a Europe it part, it's on again most So the resilience. market most Asia the North would saw I

Josh Chan

Thanks for color thanks Patrick, All the for the you and for right. time. guys

Patrick Dempsey

Yes, thanks, Josh.

Chris Stephens

Thank you.

Operator

Matt with Davidson. Your next Summerville D.A. question from comes

Matt Summerville

a last of this Just you With follow-ups. of to respect quick mold that believe out, around saw some couple I this push year. time

be this comments, product So you end more encounter what a on color or little to we give of might particular getting used type for? thing a this earlier your application expect can becoming And sort normal to market should time-to-time? from of is that that just maybe

Patrick Dempsey

and in the recognize validation that The nature from issue becomes [ph]. is after on molds, manufacturing I the the as of quarter it what's in another process, guidance. of into is that --if mold think, our is Matt, of there a manufacturing witness the then outlined, on for is we and normally slippages in specifications validation sort a probably itself business most and and And end it's these part of -- the in quarter the from and one going runs molds is coming is Yes, they the the a part, to they of closely of the and build product beast right that. the process that size as the do are the of complete to parcel and standpoint, terms manufacturing the known a There the advance very mold of right the it actually quarter coordinate the customers the money. first to when the meeting that process pertains quality that be we which always schedule completed

to that process adjustments in situation, tweaks or modifications. And in of number we then sometimes a going overall ask it subsequently we However, the make feel is they the production instances rates. at quarter to they make And their but of that improve to expense always that planned. look that will had shipping accommodate it, in

a there's shipments it's particular time, because I for common quarter -- a going said, to business. ship along variation with as So in usually ship serve what a the program. molds one aspect is of a be to don't group versus of this they large spikes one another And which quarter a at lot

Matt Summerville

the then down latter maybe that. bit put in or a little you strength saw that's that Similarly, blip personal in discernible a maybe weakness you whether Got of it. a packaging, drill on think saw some in more business? the around you trend the medical and just on change numbers further And care in

Patrick Dempsey

strong medical side XXXX. our XXXX been now, for time business a of has the Well period of and

And -- regulatory terms of make to care that’s we've and I that biodegradable seen that the those to in is of new reference affecting there the the what are seen single-use and specialty programs. devices certain to there moment that of believe side until that in requirements packaging those regulations of there's in contemplated, the of involved going plastic because where different and That solutions it clearly to we the But markets. epidemics we high said, And are race. new meantime, continued there regulations changing we've regard are that resolution and issues. the human for Europe at see plastics. the come pertains unfortunately down, to when our particularly actively discussions pausing as in terms there's creation strength demand, globe, are orders packaging in place personal of those in of business, customers in are in have end as So medical or of that in terms a medical recognize clarity been some as the we parts

Matt Summerville

then MRO aftermarket up and it. numbers you give just Got X%. And please? much the finally Can for you were mentioned how aero in was RSPs up,

Patrick Dempsey

MRO was RSPs up was and X% XX%. up

Matt Summerville

guys. Great. Thank you,

Patrick Dempsey

You're welcome.

Chris Stephens

Thank Matt. you,

Operator

over I Pitts. will to At Mr. call the turn time, this

Bill Pitts

And with Thank our would you. . XXXX for morning today's you We we this us joining third next we to like with forward you call. in speaking thank look October now all to conclude will Sharon, of earnings quarter call.

Operator

conference today’s concludes This call.

disconnect. You may now

Barnes (B) 26 Jul 192019 Q2 Earnings call transcript